Government pro-growth programs no substitute for friendly business climate across the board
New York lawmakers have acknowledged that low costs are beneficial to businesses, and that lower taxes mean more money, which leads to growth, innovation and hiring. The proof is the state’s START-UP NY program, which provides 10-year exemptions on property, sales and state income taxes to qualified new and expanding businesses. But while START-UP NY...
New York lawmakers have acknowledged that low costs are beneficial to businesses, and that lower taxes mean more money, which leads to growth, innovation and hiring.
The proof is the state’s START-UP NY program, which provides 10-year exemptions on property, sales and state income taxes to qualified new and expanding businesses.
But while START-UP NY is motivated by the right facts, its approach is misguided.
Thirty years ago, Illinois had a similar program. The “Illinois Enterprise Zone Program” was enacted with the intention of stimulating “economic growth and neighborhood revitalization in economically depressed areas of the state.” To promote such growth, these zones provide opportunities for businesses to “obtain special state and local tax incentives, regulatory relief and improved governmental services, thus providing an economic stimulus to an area that would otherwise be neglected.” Unfortunately, it is still as difficult as ever to set up a business in so-called “economically depressed” areas of the state. And the program did nothing for businesses elsewhere.
Today, Illinois’ business climate is worse than ever. With middle income shrinking by $12,000 in the past 15 years and tens of thousands of residents flocking to less-taxed states, Illinois needs a serious retooling of its economic policy, which embraces high taxes, heavy regulation and a generally unfriendly business environment.
The lesson that needs to be learned from these programs is not that the state ought to create more special privileges for developing business, but that a state with a sputtering economy like Illinois should turn itself into one big “Enterprise Zone.”